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Posted Thu, 11 May 2023 15:56:04 GMT by Lawrence
Good afternoon, I currently earn over £100k net and therefore don't qualify for tax-free childcare. However I am currently looking at getting a new fully electric car through my company's salary sacrifice scheme, which would reduce my gross income by £10k per year. I would be grateful if you could confirm how this would be calculated in the net adjusted income calculation. Would my net adjusted income be calculated as follows? Income £115k less Pension contribution £10k Salary sacrifice car £10k add BIK for Car £3k Net adjusted income = £98k? Is that correct and would I therefore quality for tax-free childcare and 30 free hours? Thank you
Posted Thu, 18 May 2023 13:31:04 GMT by HMRC Admin 32

Please note that any amounts deducted from your salary under a salary sacrifice scheme are not included as deductions when calculating Net Adjusted Income.                                                
Personal Allowances: adjusted net income

Thank you.
Posted Tue, 23 May 2023 10:44:53 GMT by Lawrence
Hi, Is that because they have already been taken into account by reducing your salary, so your Taxable Income starts lower, but you need to take into account the BIK? So on the calculation above the starting point for my Taxable income would be £105k rather than £115k? Thanks
Posted Fri, 26 May 2023 08:34:46 GMT by HMRC Admin 32

You can get confirmation of this by contacting payroll and they will advise which figure will be reported to HMRC.

Thank you.

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